Remortgage to Release Equity
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Remortgage to Release Equity
Can you remortgage to release equity? How does it work?
Yes, you can. It can be a nice easy process, and most lenders do offer this. It could be a straightforward remortgage or, if you’re in a fixed-term mortgage, we can take out additional borrowing. It’s something we can look at, as long as it is affordable for you.
Can I remortgage early to release equity?
Yes, you can. However, you would possibly have two portions to your mortgage. If you’ve already got a mortgage with a lender, we could take out additional borrowing, but it would be at a different rate to your current mortgage.
You might have a five-year fixed deal and be a couple of years into that. You might now want to take out some extra funds. It would be on a different product, but the end dates might not marry. Some people don’t mind that, while others get a bit concerned.
What are the reasons for remortgaging to release equity?
People have different needs, but it’s often home improvements. You might want a new kitchen, bathroom, a loft conversion or to put in a summer house in the garden. You might be looking to extend your home rather than move house.
It could be school fees if you’ve got children at private school. You might want to release money to put a deposit down on a new property, or if you’ve got outstanding loans and credit cards, you could do some debt consolidation.
It could be to buy a partner out. You may need to remortgage in your sole name to take out the equity from the property to buy out an ex.
Those are a few of the common ones, but there will be more reasons people want to take some money out of their home.
How do I remortgage to release equity in my property?
It depends. If you’re already with a lender and you’re in a fixed term, we can look at some additional borrowing. If you’ve come to the end of your current deal, we can source new deals for you and take out some extra money all at the same time.
It depends where you are in your mortgage term and when you want the money. It’s pointless taking money out now if you don’t need it for a couple of years – it might be beneficial to wait until the end of your fixed mortgage term. That’s something we can discuss as we explore your needs.
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How easy is it to remortgage to release equity?
It’s easier than setting up a fresh mortgage, but it is all still based on affordability. Make sure your credit score is good and you have continued to pay everything on time. It’s easier if there are no blips on your credit record.
How long does it take to remortgage to release equity?
You’re looking at weeks rather than months. It can be done reasonably quickly, depending on when you want the money.
How much can I remortgage for to release equity?
It depends on the lender, as some do have caps. You can often only go up to 90% Loan to Value, or sometimes 85%. It varies by lender and will be looked at case by case.
It also depends on the reason. Sometimes they cap it at 75% Loan to Value, depending on your intention with the money. It’s bespoke to the individual – we will go through and see what a lender offers.
You’ve demonstrated how a mortgage broker can help. Have you got anything to add?
As I mentioned before, credit score is important. Once you’ve got a mortgage, don’t go out and get his ‘n’ hers Ferraris on finance and run up your credit cards. When you do come to remortgage in the future, especially if you want to take out extra money, it’s all based on affordability.
Maybe when you first got your mortgage, you had a joint income and no major commitments. But since then you might have had triplets, and now have a lot of childcare expenses.
It’s all done on an individual basis, but if your commitments are high, it’s less likely you’ll get any additional borrowing by remortgaging at a higher amount. You might have to just stick with the loan you have at that moment.
As a mortgage adviser, I’m more than happy to help chat through your needs and see how we can help. We can often get our clients extra money for those home improvements or to buy that extra property.
Key Takeaways:
- Remortgaging to release equity can sometimes be cheaper than a standard purchase mortgage.
- You will likely incur an Early Repayment Charge (ERC) if you are breaking out of a fixed-term or tracker product with your current lender, which must be factored into your decision.
- Other associated costs may include a valuation fee (sometimes free), legal fees (often covered by a free legal service), and a lender arrangement fee to set up the new product.
- A separate broker fee may apply if you utilise the services of a mortgage broker.
- It is vital to compare the total cost of the new mortgage, including all fees, against the benefit of releasing the equity to ensure the process is financially worthwhile.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.